Hikma Pharmaceuticals (LSE:HIK) has been a very disappointing FTSE 100 stock over multiple timeframes. It’s down 33% since February 2025 and nearly 39% off in five years.
Indeed, the share price is the same today as it was back in March 2014! So it’s ultimately gone nowhere for more than a decade.
However, there’s a potentially very lucrative opportunity coming over the hill for the pharmaceutical company. So could now be a once-in-a-decade opportunity to consider scooping up shares on the cheap? Let’s dig in.
What does Hikma do?
As a quick reminder, Hikma manufactures generic medicines. These are basically copycat drugs that can be produced once a pharma company’s original patent expires.
One of Hikma’s divisions sells branded generics across 17 markets in the Middle East and North Africa, while Hikma Rx supplies oral, respiratory and other generic specialty products to the North American retail market.
However, its biggest segment is Injectables, which focuses on liquid medicines for hospitals and healthcare centres. In the US, it’s a top-three supplier of generic injectables.
This division’s more profitable — a 30%-33% core operating margin — because injectable drugs are harder to make than pills and there’s less competition.
What’s this once-in-a-decade opportunity then?
This leads us onto GLP-1 weight-loss drugs. Unlike simple pills, GLP-1s are complex injectables. They require sterile manufacturing and delivery pens. Most small generic players can’t make them, but Hikma can.
In 2026 and 2027, patents for semaglutide (the core ingredient in Ozempic and Wegovy) begin expiring in Brazil, China, Canada, India, the UAE, and elsewhere.
Crucially, Hikma already proved it could move fast by launching the first generic Liraglutide in the US in late 2024. This is a diabetes drug that mimics the hormone GLP-1 to help control blood sugar and appetite.
In countries such as Saudi Arabia and the UAE, demand for GLP-1s is very high. So a Hikma generic that’s significantly cheaper would likely enjoy huge demand.
To be clear then, Hikma isn’t trying to invent the next GLP-1 breakthrough. It’s aiming to manufacture cheaper versions for the tens of millions of people in the Middle East and North Africa who today can’t afford the pricier branded products.
Cheap valuation
Now, as exciting as this sounds, there will still be plenty of competition in this space. Teva Pharmaceuticals in particular is one of Hikma’s fiercest rivals in the generic drugs market, while patents for semaglutide don’t expire in Europe and the US until the early 2030s.
Meanwhile, Hikma’s experiencing margin pressure in its Injectables business due to a delay in a new US manufacturing facility and global supply chain pressures.
By 2027, it anticipates a 30% margin in this segment, down from 32%-33% this year. So this hasn’t helped the share price.
Nevertheless, the business still expects to reach $5bn in revenue by 2030 (about a 50% rise from 2025). And the stock looks really cheap today at just 8.6 times forward earnings. That’s a noticeable discount to both the FTSE 100 and wider pharma industry.
Finally, the stock’s sporting a well-covered 4.2% dividend yield. So there’s a decent bit of income on offer here.
Weighing things up, I reckon this FTSE 100 stock’s worth considering as a cheap way to play the global GLP-1 revolution.
